Jefferies has decreased the Bitcoin miner’s target price from 12 dollars to 4 dollars and is urging investors to avoid purchasing MARA shares as a result of delays in construction development
Bank: By mid-2023, the asset-light crypto miner will not have reached its target hash rate of 23 EH/s
In a message to investors released on Sunday, Jonathan Petersen and Amanda Santillo stated that worsening mining economics and a lack of clarity regarding the execution risks for MARA’s hosting partners keep them from moving further for the time being. Additionally, the bank decreased its price target from $12.5 to $4.
Using an asset-light business model, Marathon controls the mining machinery and relies on counterparties to host it on custom-built infrastructure. Marathon’s investment will, however, take some time to start paying off because of the significant development delays encountered by its counterparties.
Jefferies predicts that rather than the company’s anticipated mid-year, all of Marathon’s ordered machines, totaling 23 exahash/second (EH/s) of computing power, will be operational by the end of 2023.
In pre-market trading, Marathon Digital’s stock was up more than 3% to $4.23, along with the overall crypto market.
While Jefferies waits for the regulatory body to turn the machines on, Marathon missed its 9 EH/s hash rate target for the end of 2022.
Although 2.1 EH/s of computers at Applied Digital’s (APLD), Texas hosting facility is awaiting energization. In its third-quarter financial report, the miner’s goal for the year was previously lowered from 11.5 EH/s.
Additionally, according to Jefferies, the power rations at the Texas King Mountain plant have had a negative effect on Marathon.
In a revolving credit facility from ailing cryptocurrency-friendly Silvergate Bank,{SI} Marathon paid off $30 million last week.
More prediction suffering for miners
According to Jaime Leverton, CEO of Canadian miner Hut 8 (HUT), the worst is yet to come regarding capitulation and bankruptcies, especially in the first half of 2023.
The year appears to be one of survival and healing for the rest of the pack.
According to Mellerud, “Miners will utilize 2023 to strengthen their financial sheets and increase their operational efficiencies unless we experience a full-scale bull market, which I doubt will happen. Cost reduction and debt reduction will be the greatest developments this year,” However, Fiorenzo Manganiello, the CEO and founder of Cowa, a mining and venture capital firm, suggested that rather than dealing with the headaches of owning and running rigs, purchasers could be better off just buying bitcoin.